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Ukraine gas transit due to expire at end of year

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Kyiv has said no plans to renew or extend transit contract

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Austria says 'no home will go cold'

(Adds comment from Ukrainian foreign minister, paragraphs 8-9)

By Nina Chestney, Francois Murphy and Dave Graham

LONDON/VIENNA, Nov 15 (Reuters) - Russia told Austria on

Friday it will suspend gas deliveries via Ukraine on Saturday,

in a development that signals a fast-approaching end of Moscow's

last gas flows to Europe.

Russia's oldest gas-export route to Europe, a pipeline

dating back to Soviet days via Ukraine, is set to shut at the

end of this year.

Ukraine has said it will not extend the transit agreement

with Russian state-owned Gazprom in order to deprive

Russia of profits that Kyiv says help to finance the war against

it.

Moscow's suspension of gas for Austria, the main receiver of

gas via Ukraine, means Russia will now only supply significant

gas volumes to Hungary and Slovakia, in Hungary's case via a

pipeline running mostly through Turkey. In contrast, Russia met

40% of the European Union's gas needs before Moscow's 2022

invasion of Ukraine.

Austrian Chancellor Karl Nehammer said Gazprom's notice of

ending supplies was long expected and Austria has made

preparations.

"No home will go cold ... gas-storage facilities are

sufficiently full," he told reporters.

Gazprom declined to comment.

Ukrainian Foreign Minister Andrii Sybiha, writing on X, said

Russia's action showed it "once again uses energy as a weapon".

But Austria, he said, would find a way to ensure energy security

and "reject blackmail".

"The era of Europe relying on Russian gas is over," he

said. Time to fully cut Russian energy profits -- and war

funding."

OMV, Austria's biggest energy supplier, said it

has been preparing for the eventual cut-off of Russian gas and

can deliver gas to its customers by importing via Germany, Italy

and the Netherlands.

Austria's gas imports from Russia will end following a

contractual dispute between Gazprom and OMV.

In a notice published on the central European gas hub

platform, OMV said Gazprom told it supply would stop on

Saturday.

EUROPEAN COUNTRIES ADAPT

Gazprom's move may fan concerns in Austria about heating

through the winter and served as Moscow's rebuke to its

political class since the Russia-friendly Freedom Party was cut

out of coalition talks after winning Austria's election in

September, said Ulrich Schmid, a professor of Eastern European

studies at the University of St. Gallen.

European and global gas prices spiked following a drop in

Russian pipeline supplies in 2022 but some European countries

found alternative sources, including liquefied natural gas from

the United States. The U.S. has become the world's top gas

producer and is expected to expand production.

Austria was one of the first western European countries to

buy Russian gas when the Soviet Union signed a gas contract in

1968, months before the Soviet invasion of Czechoslovakia.

Germany was also heavily reliant on Russian gas before the

war, but shipments ceased when the Nord Stream pipelines under

the Baltic Sea were blown up in 2022.

Russia's notice of ending gas supplies to Austria came as

Russian President Vladimir Putin and Chancellor Olaf Scholz of

Germany held their first phone conversation since December 2022.

Russia was ready to look at energy deals if Berlin was

interested, the Kremlin said.

"It was emphasized that Russia has always strictly fulfilled

its treaty and contractual obligations in the energy sector and

is ready for mutually beneficial cooperation if the German side

shows interest in this," the Kremlin said.

Russia shipped some 15 billion cubic metres of gas via

Ukraine in 2023, about 8% of peak Russian gas flows to Europe

via various routes in 2018-2019, according to data compiled by

Reuters.

In 2023, the Ukraine transit route met 65% of gas demand in

Austria and its eastern neighbours Hungary and Slovakia,

according to the International Energy Agency. Ukraine has said

it doesn't plan to extend the transit agreement into 2025.

Hungary no longer receives much gas via Ukraine and imports

volumes via the TurkStream pipeline that runs along the bed of

the Black Sea. Slovakia still receives Russian gas via Ukraine.

Gazprom's move showed Russia flexing its muscles at the West

as pressure builds for a ceasefire in Ukraine, said Schmid at

the University of St. Gallen. Russia likely felt emboldened

after Donald Trump won the U.S. presidency this month pledging

to quickly end the Ukraine war, he added.

EU energy commissioner Kadri Simson told Reuters on the

sidelines of a UN climate conference in Azerbaijan that all EU

countries receiving gas via the Ukraine route have access to

other supply sources that could fill the gap.

"We have been very clear that alternative supply is

available and there is no need for the continuation of Russian

gas transiting via Ukraine to Europe," Simson said.

The European benchmark price for gas edged down 0.63 euro to

45.72 euros per megawatt hour at the trading close.

(Writing by Nina Chestney and Miranda Murray; reporting by

Francois Murphy, Dave Graham, Pavel Polityuk, Yuliia Dysa,

Thomas Seythal, Vladimir Soldatkin, Kate Abnett; Editing by

Louise Heavens, David Evans, Rod Nickel, Ron Popeski and Cynthia

Osterman)